Daimler And Volvo To Form Joint Venture To Develop Fuel Cell Systems
Two leading commercial vehicles manufacturer are joining forces for a sustainable form of transport. Daimler Truck AG and Volvo Group have signed a preliminary non-binding agreement for a new joint venture, sharing the Green Deal vision of sustainable transport and a carbon neutral Europe by 2050. The new joint venture will develop, produce and commercialise fuel cell systems for heavy-duty vehicle applications and other uses.
Under this agreement, Daimler will consolidate all its current fuel cell activities in the joint venture. While the Volvo Group will acquire an equal 50% share in the joint venture at a sum of approximately EUR 0.6 billion on a cash and debt free basis.
This JV company will operate as an independent and autonomous entity, with Daimler Truck AG and Volvo Group continuing to be competitors in all other areas of business. The main goal of joining forces is to reduce development costs for both companies as well as accelerate the market introduction of fuel cell systems in products used for heavy-duty transport and demanding long-haul applications. In view of the current global economic slowdown, cooperation has become even more necessary in order to meet the Green Deal objectives within a feasible time-frame. The Green Deal is a plan to make the European Union’s economy sustainable by becoming more resource-efficient and considering climate change and environmental challenges.
“Transport and logistics keep the world moving, and the need for transport will continue to grow. Truly CO2-neutral transport can be accomplished through electric drive trains with energy coming either from batteries or by converting hydrogen on board into electricity. For trucks to cope with heavy loads and long distances, fuel cells are one important answer and a technology where Daimler has built up significant expertise through its Mercedes-Benz fuel cell unit over the last two decades. This joint initiative with the Volvo Group is a milestone in bringing fuel cell powered trucks and buses onto our roads,” says Martin Daum, Chairman of the Board of Management Daimler Truck AG and Member of the Board of Management of Daimler AG.
“Electrification of road transport is a key element in delivering the so called Green Deal, a carbon neutral Europe and ultimately a carbon neutral world. Using hydrogen as a carrier of green electricity to power electric trucks in long-haul operations is one important part of the puzzle, and a complement to battery electric vehicles and renewable fuels. Combining the Volvo Group and Daimler’s experience in this area to accelerate the rate of development is good both for our customers and for society as a whole. By forming this joint venture, we are clearly showing that we believe in hydrogen fuel cells for commercial vehicles. But for this vision to become reality, other companies and institutions also need to support and contribute to this development, not least in order to establish the fuel infrastructure needed,” says Martin Lundstedt, Volvo Group President and CEO.
The common goal for both companies is to offer heavy-duty vehicles with fuel cells for demanding long-haul applications in series production in the second half of the decade. Further, other automotive and non-automotive applications will also be part of the new joint venture’s scope.
To enable the joint venture, Daimler Trucks will consolidate all group-wide fuel cell activities in a new Daimler Truck fuel cell unit. Part of this bundling of activities is the allocation of the operations of Mercedes-Benz Fuel Cell GmbH, which has longstanding experience in the development of fuel cell and hydrogen storage systems for various vehicle applications, to Daimler Truck AG. The joint venture will include the operations in Nabern, Germany (currently headquarters of the Mercedes-Benz Fuel Cell GmbH) with production facilities in Germany and Canada.
Fuel cell technology uses hydrogen as a fuel source to generate electricity and power motors that propel an electric vehicle. The two primary ways of producing this hydrogen is by breaking down the molecules of water into hydrogen and oxygen (known as green hydrogen), and by carbon capture technology using natural gas (known as blue hydrogen). The benefit of fuel cell is the faster replenishment, similar to filling up a fuel tank now. The downside is the energy needed for hydrogen production as well as storage and safety issues.
Daimler and Volvo are expected to come to a final agreement by Q3 and closing before year-end 2020. All potential transactions are subject to examination and approval by the responsible competition authorities.
